Meadows’ and Altmann’s Records on Tax Incentives for Developers: Reality Check

Thursday, October 3, 2019, 9:19 am
By: 
Alice Dreger

Mayor Pro Tem Erik Altmann (left) with former Director of Planning Tim Dempsey (right) at the November 2018 Michigan Strategic Fund meeting where the DRW Convexity East Lansing project was awarded $16 million in tax incentives.

In the Lansing State Journal this week, Erik Altmann, who is running for re-election to City Council, is quoted as saying, “I do not support tax incentives for developers.” Mark Meadows, also running for re-election, is quoted as saying that East Lansing “does not provide ‘tax incentives’ for developers.”

In advance of tonight’s candidate forum hosted by the League of Women Voters, we’re being asked by readers to fact-check these two incumbents’ claims.

As a reminder, there are six candidates for three open seats. The challengers are Lisa Babcock, Jessy Gregg, John Revitte, and Warren Stanfield.

What the records show:

Altmann and Meadows have voted in favor of plans and agreements that amount to at least $74 million in tax incentives for development over the last four years.

Costco TIF plan, about $2 million:

As shown in this approved TIF (tax increment financing) plan, about $2 million in taxes will be captured and given back to the developers of the new Costco store site, for reimbursement of development expenses, including public infrastructure.

Meadows and Altmann voted in favor of those tax incentives.

Under this TIF deal, over 15 years about $420,000 in new taxes will be diverted away from East Lansing’s coffers to pay back the developers for expenses. Ingham County will see about $170,000 in new taxes diverted. Lansing Community College will see about $66,000 diverted, Capital Area Transportation Authority (CATA) about $52,000, the Intermediate School District about $104,000, and so on.

In discussions of TIF use, Altmann has said that he believes TIF can be good for East Lansing because it diverts new taxes from other local taxing authorities (like Ingham County, CATA, and LCC) and puts it into economic development specifically in East Lansing. That is indeed the effect.

The land of the Costco site is jointly governed by the City of East Lansing and Meridian Township. As we reported, in an unusual display of political discord, Meridian Township openly objected to the idea of using TIF for this project.

Costco is showing profits of about $3 billion a year, and Meridian Township officials believed that Costco would in fact build and operate the store without being offered TIF. East Lansing’s Council went ahead with the TIF.

Park District, about $6 million in TIF plus $10 million in state tax credits:

As shown in this approved TIF plan, about $6 million in local taxes will be captured and given back to the developers of the DRW Convexity Park District redevelopment, for reimbursement of development expenses. That includes reimbursement for private development costs.

Meadows and Altmann voted in favor of those tax incentives.

In addition to these local tax incentives, the DRW Convexity Park District project is made possible through $10 million in state level tax credits. That’s $10 million in state taxpayers’ money going to the developers.

Recall that Altmann told the Lansing State Journal, “I do not support tax incentives for developers.”

In fact, Altmann was the only member of East Lansing’s City Council to attend the Michigan Strategic Fund (MSF) meeting where the $10 million in tax credits for DRW Convexity were approved. There, he congratulated the developers on obtaining the credits.

Center City District, about $56 million in TIF:

As shown in this approved TIF plan, the Harbor Bay/Ballein Development Center City District project will involve diversion of about $56 million in new taxes for 30 years to pay for costs related to that development. All eligible local taxes are being diverted.

Most of the TIF in this deal is going to pay for the new parking garage on Albert Avenue. By contract, that new garage is half-leased to the developers for permit parking for their private tenants, at a discounted rate compared to what the average parker in East Lansing pays to use a spot.

Using the Freedom of Information Act, our investigative reporting has shown that new taxes from the project are also being used to pay the developer’s lawyer, pay the developer’s financial advisor, pay for private construction costs on the Grand River Avenue building (including demolition, excavation, and foundation work), and pay an “origination fee” to developer Mark Bell’s father.

Meadows and Altmann voted in favor of that TIF plan.

So what’s the truth about Altmann’s record?

If Altmann now says he does not support tax incentives for developers, that appears to represent a change of heart for him. His record shows he has supported tax incentives for developers.

What about Meadows?

Meadows told the Lansing State Journal, “I am satisfied with the development [in East Lansing], I am not satisfied with the management of the Hub.”

The Hub was built without any local tax incentives and is expected to bring in about $800,000 per year in new local taxes, including about $200,000 per year for East Lansing. All five members of Council voted in favor of that TIF-free project.

Meadows also told the Lansing State Journal, “EL (East Lansing) does not provide ‘tax incentives’ for developers … the City requires the developer to loan it the money to accomplish public infrastructure replacement and environmental cleanup, the City pays the developer back with the developer’s paid taxes over a period of time.”

In fact, both Center City and the Park District TIF plans pay in part for private development expenses. In the case of Costco, Meridian Township leaders believed the developer could have paid for the public infrastructure costs – that there, the diversion of new taxes to the project was never needed to get it done.

ELi has a voter guide to the election here.

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Correction: When this article was posted, we reported that Costco has about $3 billion a year in sales. We've corrected the article to report that Costco sees about $3 billion in profit. (In 2018, their sales amounted to $141.6 billion.)

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